Australia Kills Carbon Tax, And With it $4 Billion Of Green Spending
Compensation for industry will be pared back and programs funded by the carbon tax could be cut to help the government find the $4 billion it will cost to shift the fixed carbon price to a floating price a year earlier than scheduled.
Prime Minister Kevin Rudd, who is expected to announce the final details on Tuesday, confirmed on Sunday that the carbon price will shift to a floating price on July 1, 2014, enabling the government to distance itself from Julia Gillard’s policy, which has caused Labor enormous political damage.
The Greens slammed the measure as environmentally irresponsible, manufacturers welcomed it as providing much-needed relief, and the coal, gas and minerals sectors condemned it for not going far enough, saying the carbon price should be scrapped altogether.
Before the change, the carbon price was to be fixed at $25.40 in 2014-15, up from $24.15 in 2013-14, before moving to a floating price linked to the European Union scheme on July 1, 2015.
That shift to a floating price will now occur a year earlier. The change from $24.50 to a European price of about $6 to $10 will cost the budget about $4 billion in 2014-15.
Mr Rudd stressed the change would be revenue neutral, the policy goals still achieved and consumers given relief.
“The key thing though is that with this change, it would mean that Australian families have less cost of living pressures and it would also mean strong action still on the environment and climate change,’’ he said.
Treasurer Chris Bowen said the compensation for low and middle-income households would not be reduced, even though it was designed for the higher fixed price.
A lower carbon price also meant lower energy prices. Mr Rudd identified high energy prices last week as the key impediment to productivity growth.
Under the policy change, a dual income couple, for example, with two children aged three and eight, would reduce their annual cost of living by about $420.
But Mr Bowen said industry compensation “will be calibrated to match new arrangements’’.
This would include reducing the value of free permits given to trade-exposed industries. In the May budget, programs funded by the carbon tax were cut to fill the revenue hole created by the lower than expected carbon price in 2015-16 when the link with the EU emissions trading scheme was due to start. […]
Opposition Leader Tony Abbott said the shift was a “con job’’ because “whether it is fixed or floating, it is still a carbon tax”.
A spokesman for the Australian Petroleum Production & Exploration Association, Michael Bradley, said irrespective of the price, the floating price was still an impost for the LNG industry which was not shared by its international competitors.